Thank you towo, I did as you suggested, got rid of dkms but still it doesn't seem to work,I can boot your kernel but any new kernel drops me into shell ,and after that 'no screen found' By the it doesn't look like I have a file named xorg.conf.d

In addition to what towo said, a little history might be useful: A few months ago xorg was updated to use /etc/X11/xorg.conf.d/*.conf for the *.conf files. Prior to this one file was used, /etc/X11/xorg.conf. If you still have /etc/X11/xorg.conf it is recommended that you either simply delete it or move it into /etc/X11/xorg.conf.d (this also might be a good time to clean up the directory and get rid of any backup files there). This change in naming is the same as what happened with apt since we now use /etc/apt/sources.list.d/*.list instead of /etc/apt/sources.list. Expect all programs that have a configuration file to eventually be replaced with such a naming system.

Thank you guys for your input,I will certainly use your advice ,however it's not all that simple.I have been aptosid user since sidux and always update my system as soon as it safe to do so. I can't post /var/log/Xorg.0.log because of :
root@ethernity:/home/spaceferret# /var/log/Xorg.0.log
bash: /var/log/Xorg.0.log: Permission denied
And as you can see it I'm doing it as root.Why permission denied- no idea.

Regarding /etc/X11/xorg.conf.d - there's no such directory
This is the content of my X11

So far no luck. I followed all instructions but the problem persists. Everything works fine with Flickerplatz kernel but not with aptosid one. Well, I guess I'll have to stick with Flickerplatz for now. Trying to compile nvidia-kernel-source with newer kernel gives me 'nvidia-kernel-source is already newest versions'

-rw-r--r-- means readble for everybody, writable for owner(root) only, executable to nobody
if it is not a program (binary or script), even root can not execute it. Thus permission denied.
problem is not who you're (root or not), but this log file is not a program but a data.
(you need a program name like cat, less, vim, etc., before the filename)